FAQ: Compliance Guide for H-1B Dependent Employers
When a US company’s employee population comprises a certain number of H-1B visa holders, the US Department of Labor categorizes certain H-1B employers as “H-1B dependent employers.” These FAQs are intended to clarify which entities would be considered “H-1B dependent employers” and their related compliance requirements.
Who is an H-1B dependent employer?
In accordance with 20 CFR § 655 Subparts H, an employer is considered H-1B-dependent if it has: (i) 25 or fewer full-time equivalent employees and at least 8 are H-1B nonimmigrant workers; or (ii) 26 - 50 full-time equivalent employees and at least 13 are H-1B nonimmigrant workers, or (iii) 51 or more full-time equivalent employees of whom 15 percent or more are H-1B nonimmigrant workers.
When must an employer calculate and determine its H-1B dependency status?
The employer must determine dependency when filing either: (i) an LCA; (ii) an initial petition H-1B based on an LCA;or (iii) a request for an extension of H-1B status for a nonimmigrant worker based on an LCA. An employer undergoing a corporate reorganization must also recheck its dependency status before filing new LCAs for future petitions.
How to determine if an employer is H-1B dependent?
The Interim Final Rule (IFR) provides that entities considered a “single employer” under the Internal Revenue Code sections must combine their employees for determining their dependency calculation. This “single employer” definition is only to be used in dependency calculation, and not in any other element of H-1B LCA filing or enforcement.
For most H-1B employers, regardless of their size, the ratio of H–1B employees to the total workforce should be easily calculated once you have the number of total employees and the number of H-1B visa holders identified.
Examples:
Employer A has 20 employees, of which 2 are H–1B visa holders. Determination: Employer A is not H–1B dependent.
Employer B has 45 employees, of which 30 are H–1B visa holders. Determination: Employer B is an H–1B dependent employer.
Employer C has 500 employees, of which 30 are H–1B visa holders. Determination: Employer C is not H-1B dependent.
How to determine who is an “employee” in calculating H-1B dependency?
Independent contractors and/or consultants for whom the employer files an IRS Form 1099 are not considered employees. The number of qualified employees would be determined through the employer’s quarterly tax statement (or similar document).
Who is a full-time employee?
In accordance with the DOL guidance here, the employer’s standard for full-time employment would be accepted, provided it was no less than 35 hours per week (or, where the employer has no standard, 40 hours per week).
When counting full-time employees, the Interim Final Rule at § 655.736(a)(2)(iii)(B), provides the employer a choice between two methods:
The employer may count each part-time worker (i.e., each employee working less than a full-time schedule) as ½ of an FTE; the employer simply counts the number of part-time workers and divides by two to arrive at the number of FTEs represented by its part-time workers, or
In the alternative, the employer may total the hours worked by all the part-time workers in a workweek and divide that total by the standard hours for full-time employment (e.g., 40 hours).
The DOL notes that the employer may use any reasonable method of approximating the average hours worked by its part-time workers, such as their standard work schedule.
What records must be maintained by an H-1B dependent employer?
In addition to the records generally maintained by all H-1B employers, an H-1B-dependent employer must keep the documentation of dependency calculation including:
If the dependency is not obvious;
The employer attests that it is not dependent but does not meet the “snap-shot” test;
The employer’s status changed from dependent to non-dependent;
If an employer uses the IRS “single employer” test to determine dependency, it must keep records of which entities are included in the definition of single employer as well as the computation performed (either the snapshot or full calculation); or
if any employees are included in the calculation that are not on the employer’s normal payroll, the employer must have documentation to substantiate that the workers are indeed employees.
None of this documentation must be kept in the public access file, but must be made available to DOL in an investigation.
How does an employer attest to their status on the LCA?
On the current form LCA, the employer could select the following options in attesting to its dependency status:
Non-dependent;
Dependent but the H-1B visa holders sponsored under this LCA are “exempt;” or
The employer is dependent, the employees are “non-exempt,” and the employer will comply with the additional attestations.
By regulation, H–1B dependent employers with existing LCAs must file new LCAs if they wish to petition for any new H–1B nonimmigrants or seek extensions of any existing H–1B visas. Also, DOL would require all non-dependent employers that experience a change of status (becoming H–1B-dependent) to file new LCAs if they wish to petition for new H–1B nonimmigrants or seek an extension of existing H–1B visas after the date they become H–1B-dependent.
Who qualifies as an“exempt H-1B worker?”
In accordance with 20 CFR 655.737(b), H-1B workers are considered exempt (and the employers do not have to make additional attestations) if they: (i) receive at least $60,000 in annual compensation (including cash bonuses or similar but not benefits); or (ii) hold a master’s degree or higher, or a foreign equivalent, in a field related to the offered position. The DOL for (ii) requires an actual degree and no work experience equivalency.
If an H-1B beneficiary/employee falls into at least one of the exceptions noted above, the employer then is exempt from the additional H-1B attestations on the LCA as discussed below. Note, however, that such employee(s) is still counted in determining whether the employer is H-1B-dependent.
Documentation requirement: The DOL mandates employers to include in their LCA Public Access File:
A list of the H–1B visa holders supported by an LCA attesting that it will be used only for exempt workers, or
A simple statement that the employer employs only exempt H–1B workers.
Employers will need to retain (although not as part of the Public Access File) H–1B petitions and any evidence regarding workers’ exempt status (i.e., pay records and evidence related to educational attainment) so that they may be provided to DOL in the event of an investigation.
What additional attestations are required for an H-1B dependent employer who employs non-exempt H-1B visa holders?
In the case of an H-1B dependent employer employing non-exempt employees, the employer must agree to additional attestations on the LCA submitted. The attestations include the following:
Displacement: The employer will not displace any similarly employed US worker within the period beginning 90 days before and ending 90 days after the date of filing the H-1B nonimmigrant petition (not the date of LCA filing).
Documentation: Employers must also maintain all documents concerning the departure of any U.S. employees (during the 180 day window) and the terms of any offers of similar employment made to them and their responses. They must maintain typical personnel records of such US workers including name, last known mailing address, title and description of job, and any documentation kept on the employee’s experience. There is no need to maintain this document in the Public Access File. However, the employer must present this in case of an investigation.
Secondary Displacement: The employer will not place the employee at another employer's worksite unless the petitioning employer has made a good-faith inquiry (via written assurance such a clause in the contract) as to whether the other employer has displaced or intends to displace a US worker any time between 90 days before and 90 days after the placement, and has no knowledge to the contrary. If the other employer makes such a displacement, the petitioning employer may be subject to civil money penalties and disbarment.
Recruitment and Hiring: Prior to filing any H-1B petition, the employer took or will take good-faith steps meeting industry-wide standards to recruit U.S. workers for the job for which the nonimmigrant is sought, offering compensation at least as great as required to be offered to the H-1B nonimmigrant. The employer will or has offered the job to any U.S. worker who (has) applied and is equally or better qualified than the H-1B nonimmigrant worker. Under the Immigration and Nationality Act (INA) Section 212 (n)(1)(G)(ii), 8 U.S.C. 1182, the “recruitment and hiring” labor condition statement does not apply to the employment of an H-1B nonimmigrant worker who is a "priority worker" (defined as a person with extraordinary ability, or outstanding professors or researchers, or certain multinational executives or managers).
Documentation requirement: Employers must keep documentation of the recruiting methods they used, including the places, dates, and contents of advertisements or postings, and the compensation terms. A summary of the recruitment methods used and periods for recruitment must be maintained in the Public Access File and produced during an investigation.
In the case of corporate restructuring, how does an H-1B depedent employer meet its compliance requirements?
The DOL has confirmed that a change in an employer’s H–1B dependency status as a result of a change in the corporate structure (including mergers, acquisitions, spin offs) would have no effect on the employer’s obligations with respect to its current H1B workers. In other words, if an employer who was H–1B dependent becomes non-dependent as a result of a change in structure, it would be required to continue to comply with the secondary displacement attestation unless it chooses to file a new LCA and H–1B petition(s) for any H–1B worker(s) employed pursuant to the ‘‘dependent’’ LCA.
Similarly, a non-dependent employer that becomes dependent as a result of corporate restructuring would not be required to comply with the H–1B-dependent employer obligations for H–1B workers employed pursuant to a pre-existing LCA, provided the employer has assumed the obligations and liabilities of that LCA. In any case, a new LCA (attesting to the newly acquired H–1B dependent or non-dependent status) would have to be filed for all future H– 1B petitions and extensions of status.
What are additional LCA notice items for H-1B dependent employers?
If the employer is an H-1B-dependent employer and if the LCA is being used for non-exempt H-1B nonimmigrant workers, then notice shall be made in accordance with the requirements of 20 CFR 655.734(a)(1)(ii) setting forth the nondisplacement and recruitment obligations to which the employer has attested, and shall include the following additional statement: “Complaints alleging failure to offer employment to an equally or better qualified U.S. applicant or an employer's misrepresentation regarding such offers of employment may be filed with the Department of Justice, Civil Rights Division, Office of Special Counsel for Immigration-Related Unfair Employment Practices, 950 Pennsylvania Avenue, NW., Washington, DC 20530, Telephone: 1 (800) 255-8155 (employers), 1 (800) 255-7688 (employees); Web address: http://www.usdoj.gov/crt/osc”.